Accolent ERP in accordance with US GAAP, capitalizes the vendor’s costs as well as other direct product costs, treated as Landed Costs, when purchasing inventory. These capitalized costs are amortized on the basis of Average Cost, to the income statement when the inventory is sold.
Receiving a PO
- Issue a PO for goods for inventory and then receive the PO.
- System allows you to purchase in one UOM and keep stock in another.
- The Stocking Unit of Measure tab on the product tracks the relationship between a purchasing UOM and the Stocking UOM (e.g., you purchase by the case but stock by the box and there are 12 boxes per case).
- When an inventory PO is received, the inventory account is debited for the cost of the products received.
Average Cost
- The cost that is assigned to an individual product received is the PO total for that product divided by the quantity received.
- The cost of the product is added to the total value of that product on hand and then divided by the new total quantity on hand in inventory – this is known as the Average Cost (for that product).
- The Average Cost is recalculated each time you receive more of that particular product.
Freight/Landed Costs
- At PO Receipt, you have the opportunity to add in the freight and/or landed costs to the total cost of the purchased items.
- If you enter Freight/Landed Costs these will be apportioned between all the products received and added to the average cost.
- After you save the quantity received a pop-up will allow you to enter the freight and/or landed costs.
- If you do not want to include Freight/Landed Costs as direct product costs, don’t make any entries.
- This means you want to expense the freight and/or landed costs as a period cost.
- When you receive the voucher for the freight and/or landed costs you can designate those vendors as non-inventory vendors and post the debit (expense) to freight expense and the credit (payable) to Accounts Payable.
PO Receipts/Inventory Ajustments Journal
- Since, it is not typical to get the Vendor’s Invoice at the time of the delivery of goods, the PO receipt is accounted for in two steps.
Upon PO Receipt
- Upon PO Receipt the PO Receipts Journal makes a posting to the GL to: debit Inventory and a credit Unconfirmed Accounts Payable.
- The Unconfirmed Accounts Payable account is included in the default chart of accounts and in the warehouse GL defaults.
- If you decide not to use the default chart of accounts you will have to create your own Unconfirmed Accounts Payable account and set it up in the warehouse defaults table.
Upon Entry of Vendor’s Invoice
- When the Vendor Invoice (referred to in Accolent ERP as a voucher) is entered for payment the PO Receipts Journal debits Unconfirmed Accounts Payable and credits Accounts Payable.
- The voucher entry matches the voucher to a PO receipt; when done, the voucher appears in Accounts Payable aging and can be paid on a check.
- On the vendor master record you will have to note whether the vendor is an inventory vendor or a non-inventory vendor – this will determine whether there are two steps to the posting (using the PO Receipts Journal) or one step (using the AP Journal).
- In the vendor record, you can see the postings set up using the Actions > Voucher Allocations menu dropdown.
- The Inventory Vendor checkbox must be selected for a PO Receipts Journal posting.
Sales Journal
- When you invoice a sales order the average cost of the inventory items sold is posted as a credit to Inventory and a debit to Cost of Goods Sold.
- All the GL accounts that are used by these automated entries are set up in the Warehouse GL Defaults.
- The Warehouse GL Default accounts need to be set up as a minimum even if you are not using the full accounting system provided by Accolent ERP.
- If you decide to use/import your own chart of accounts, you will need to fill in the Warehouse Defaults table with the proper corresponding accounts.